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F ederal reser ve Ba n k

Dallas, Texas, March 5, 1947


To Member Banks in the
Eleventh Federal Reserve District:
It is a pleasure to present the operating ratios of member banks in the Eleventh Federal Reserve
District for the year 1946, with comparative figures for 1945. In the report for 1946, the asset and
liability items are the averages of the amounts taken from the reports of condition as of December
31, 1945, June 30, 1946, and September 30, 1946, while the earnings and expense items are the
amounts reported by member banks for the calendar year 1946. Although aggregate deposits of all
member banks declined during 1946, average deposits of most banks were somewhat higher than
the average for 1945. In consequence, several banks again have moved into a larger size deposit
group, and this fact should be taken into consideration in studying the ratios for the several groups
of banks. The ratios for the various groups represent unweighted averages of the percentages for
individual banks rather than the ratios computed from the aggregates of all banks included in the
respective groups.
Net profits after income taxes realized by member banks in this district averaged 13.4 per cent
on total capital accounts for the year 1946 as compared with 11.1 per cent for 1945. The increase
in the rate of profits was general at banks in all deposit size groups, but the most pronounced gains,
as well as the highest percentage of profits realized on capital accounts, occurred in those groups
of banks with deposits ranging from $1,000,000 to $10,000,000. Reflecting the substantial expansion
in loans, the proportion of total earnings derived from interest on loans showed a sizable increase
during the year, the average for all banks being 50.8 per cent of total earnings in 1946 as comĀ­
pared with 47.1 per cent in 1945. This increase occurred at banks in all deposit size groups. In
contrast with the trend in evidence for several years, the proportion of total earnings derived
from interest and dividends on securities declined to 34.1 per cent in 1946 from 35.2 per cent in 1945.
The proportion of earnings realized from service charges on deposit accounts again declined at banks
in all deposit size groups.
Although the expenses of member banks generally increased materially during 1946, the rate
of increase was less pronounced than that of total earn'ings. In consequence, the percentage of total
earnings absorbed by expenses amounted to 60.7 per cent in 1946 as compared with 65.3 per cent in
1945, with the decrease occurring at banks in all deposit size groups.
The majority of member banks in this district has continued conservative dividend policies and
has added a very large share of their net profits to capital accounts. During 1946, dividends paid to
stockholders averaged 4.5 per cent on total capital accounts as compared with 4.1 per cent in 1945
and 4.3 per cent in 1944. Taxes on net incomes were generally higher in 1946 than in the preceding
year, averaging 7.4 per cent of total earnings in 1946 as compared with 7.1 per cent in 1945.
As in former years, the ratios of your bank have been entered on your confidential copy to
permit a convenient review of your operations for the past two years and a comparison with the
operations of a group of banks of similar size.
It is hoped that this information will be interesting and valuable to your bank.
Sincerely yours,

This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (

Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102